Stock Market Update | Which market is emerging with strength & will the Nasdaq recover?

Global Stock Market Update – 18 August 2024

After the ‘Carry Trade Panic’ of a couple of weeks ago the markets have really bounced back pretty well. Looking at the charts of the main indices you can see a very steady recovery over the last week. Moments like this are pretty much perfect for our long side mean reversion strategies with several of them making out like bandits in the last couple of weeks!

As you know, I don’t like to predict the markets as I would much prefer to let my diversified portfolio of automated systems do the work for me. But it is too early to tell whether the shock from Japan was just temporary whether there will be more of a correction to come. If we make it back to all time highs then things are probably safe for now.

Interestingly looking at the chart of the Hong Kong market below, the impacts of the Japan shock were pretty much non-existent there. (another reason I like having HK stocks in my portfolio of systems). While the Hong Kong market has not been strong over the last few months, it does look like it has established a shallow up trend since the low of January 2024. If the recent low at the start of August holds we might be in for some interesting upside action there shortly.

Over the last week the US markets have staged a very uniform, broad based recovery after the shock two weeks ago. Really I am looking at the charts here to see if the tech strength resumes. The long term uptrend is certainly still in place so I don’t think I would bet against that for now… lucky I am not a betting person though.

One of two things will probably happen next in my portfolio: The long side NDX Rotational system will recover it’s recent drawdown and continue it’s strong run OR if the markets decline it will go to cash and my US Short System will turn on. With the broadly diversified systematic approach to trading, I don’t actually care which of these happens, but one of them will happen… the key is to be patient enough to sit through the uncertainty while we wait.

The story was much the same across the world (except Russia – but not much chance of me putting capital into that market any time soon). Broad based rallies across the global markets after the short term panic a couple of weeks ago. Let’s see how long it lasts – one thing I know for sure after trading systematically for this long is you can’t predict the market and it is best to have a broadly diversified portfolio of systems and allow them to do the work for you (Learn how HERE)

SIDE NOTE: If you want to pull Norgate and other data sources into Excel, make dashboards and automatically update your performance reports and trade logs then get XLQ2 – It is what I use for this table and many other analyses in Excel. Check out XLQ and get a $50 discount.

Our Trader Success System mentoring students have access to a large number of systems and as you can see from the equity curves below there is quite a mix – we have long side trend following, mean reversion, rotational systems, short systems and seasonality systems… and they cover US, ASX, TSX and LSE.

What I know from following these systems for so long is that they all have good times, bad times and flat times. It is not the perfect system that makes you money, it is the portfolio of good systems that makes you money!

Trading Tip of the Week:

The Power of Diversification Across Strategies

Relying on a single trading strategy can expose you to unnecessary risks, especially when market conditions change. By diversifying across multiple strategies, such as trend following, mean reversion, and rotational momentum, you can smooth out your performance and increase your chances of consistent success. For instance, while trend following may excel in trending markets, a mean reversion strategy can thrive during periods of market consolidation, balancing your overall portfolio performance.

To learn more about how to effectively diversify across multiple trading strategies, read the full article here.

News from EST

This week we launched our new Capital Allocation and System Monitoring tools for our mentoring students. I am pretty thrilled with the results… we can now pull in the equity curves from a huge number of systems and determine how to best allocate funds between them for maximum diversification value. We also have a great Monte Carlo tool to evaluate system performance compared to the historical performance of the system to evaluate system stability. We had a live session to launch it and everyone is very excited about it!

The second thing we kicked off this week is a refresh of The Trading System Collection which is a core part of The Trader Success System. We are not changing the systems, instead we are adding to them for our Mentoring Members. Active members of our mentoring program will soon get access to an expanded collection of 27 systems which cover 5 markets including US, ASX, TSX, HK and LSE.

While I think of it – Given you have done The Trader Success System, I would really love your help…

We are running a FREE live training for traders new to our world called Market Mastery Bootcamp. It is not suitable for YOU because it is introductory training and you have all my advanced stuff. However, if you know any traders who are not part of EST, I would really love to share this information with them.

Help your trading buddies get ahead, stabilize their trading and show them the fastest path to consistency, by encouraging them to join Market Mastery Bootcamp for FREE using the link below. I promise I will make it worth their while:

https://go.enlightenedstocktrading.com/market-mastery-bootcamp

Just send them the link and suggest they register – they will thank you for it!

On the Home Front

Stephanie is away on a retreat this week which sounds like it is going to be AMAZING, so I am on my own with the kids till later in the week… I am very lucky as they are very self sufficient and independent. However the dog (Gizmo) does seem to get a bit neurotic whenever the whole ‘pack’ is not together.

In the garden this week the Snow Peas and Sugar Snaps have gone ballistic and I am harvesting way more than we can eat, but they have been pretty amazing.

We had breakfast at the beach this morning before Stephanie left for the retreat and it was probably the flattest I have ever seen the ocean – it literally looked like a lake with just a few ripples on it. I forgot to take a photo so you will just have to take my word for it.

Stephanie and I have been watching ‘Seal Team’ on Paramount, but since she is away I have to pause that (it’s an agreed ‘couples show’ so I can’t watch ahead while she is away) So I would love your suggestions for your favourite shows right now… Here are some of my favourites in case you have any suggestions like these:

• The Jason Bourne series
• Alone (I quite like survival shows, but not Survivor – I don’t like the politics of it)
• Marvel Universe (but not DC… don’t know why but DC just sucks – I think it is because it is darker than Marvel)
• John Wick series
• Anything with Jason Statham (yes I know, I have high brow tastes )
• Mr and Mrs Smith (Hilarious Spy Spoof)
• Starwars everything
• Seal Team

Let me know if you have any suggestions for me.

Finally my son has his last year 12 Trial Exam tomorrow. He has done a stellar job preparing over the last few weeks so I am looking forward to him seeing the results of his efforts and taking a bit of breath before revving up for the final exams in a few months.

Winter is on the home stretch in Australia and I can’t wait for Spring. I live in eternal jealousy of my Singaporean friends who get warmth 365 days a year!

Have a great week.

Remember – You’re only one trading system away!

Adrian Reid

Founder – Enlightened Stock Trading

P.S. Since you have done both The Trader Success System and The Crypto Success System but you have not yet automated your trading, I would really encourage you to think about automation to improve your consistency, reduce mistakes, save time and increase diversification. The Smart Stock Automation is fantastic and I would never trade without it. Check it out and comment to this post if you have any questions – I would be happy to help you out and answer any questions! Good automation like this is really life changing!